Trump says he will tap economists for 2 key Fed vacancies

U.S. President Donald Trump, who has criticized the Federal Reserve for not cutting interest rates, said Tuesday that he intends to nominate two economists to fill influential positions on the central bank's Board of Governors.

US President Donald Trump speaks to the media at the White House on July 1, 2019 in Washington, D.C. [File Photo: IC]

Trump said he would name to the board Christopher Waller, who is executive vice president and research director at the Federal Reserve Bank of St. Louis, where he has worked since 2009. He also tapped Judy Shelton, the U.S. executive director for the European Bank of Reconstruction and Development. Shelton was previously an economic adviser to Trump's presidential campaign.

The planned nominations were announced by Trump in a tweet late Tuesday. Each must be confirmed by the Senate.

Trump's choices come after he has harshly and repeatedly criticized the Fed under Chair Jerome Powell for raising rates four times last year and for keeping rates unchanged this year. Trump has argued that the Fed, by keeping its benchmark rate in a range of 2.25% to 2.5%, is slowing economic growth and depressing the stock market.

This spring, Trump said he planned to nominate former GOP presidential candidate Herman Cain and conservative commentator Stephen Moore to the remaining two vacancies on the Fed board.

But Cain withdrew from consideration after allegations of sexual harassment and infidelity, first aired during his 2012 presidential run, resurfaced. Moore withdrew in the face of Republican opposition in the Senate after news organizations unearthed many of his writings belittling women.

Shelton has a history of attacking the Fed's policies and has also supported the gold standard, under which the value of currencies like the dollar are fixed to a specific amount of gold. Most mainstream economists who study monetary policy reject the gold standard as antiquated.

Shelton has expressed support for cutting rates, as Trump has demanded.

Waller's approach to interest rate policy is less clear but he serves as the research director in St. Louis, a regional Fed bank whose president, James Bullard, has been advocating for lower rates and even dissented at the Fed's last meeting, arguing that the Fed should immediately cut rates.

"Waller works for James Bullard and usually the research director at a regional bank and the bank president hold similar views," said Sung Won Sohn, economics professor at Loyola Marymount University in Los Angeles. "I suspect that the administration has chosen Waller because his views on interest rates are similar to those of Bullard."

Bullard said last month that he had been approached by White House officials about joining the Fed's seven-member board. He said he told the administration that he was happy in his current position as president of one of the Fed's 12 regional banks.

Before joining the St. Louis Fed, Waller was an economics professor at the University of Notre Dame for six years, and before that a professor at the University of Kentucky.

With the latest nominations, Trump will have filled six of the Fed board's seven seats including tapping Powell to be Fed chairman when Trump decided not to offer Janet Yellen a second term as chair. The number of Trump choices on the Fed board, however, has not stopped the president from attacking the central bank and Powell specifically for pursing monetary policies that the president believes are harming the economy.

The Fed next meets to consider interest rates at the end of this month and financial markets widely expect the central bank will begin cutting rates at that time if the economy continues to show signs of weakening.

At the Fed's last meeting, the central bank promised to do what was needed to protect the current 10-year economic expansion, which this month became the longest in U.S. history.